Pacific Radiation Oncology LLC v. Queen’s Medical Center is a “retro” case in which the plaintiff physicians have obtained a temporary restraining order barring Queen’s Medical Center from adopting a closed department policy for its radiology oncology department.
Although this case is just in its early stages, it is interesting to note that federal court is recognizing the old theory that hospitals which receive governmental funding may be quasi public institutions and that their actions must therefore satisfy state constitutional due process requirements.
Although courts routinely allow hospitals to close departments and enter into exclusive contracting agreements for various departments or services within hospitals, this case recognizes that doing so while other physicians maintain existing medical staff membership and clinical privileges may raise state constitutional due process issues.
It is also noteworthy that this opinion does not mention the contractual issues associated with barring physicians from using existing clinical privileges on the basis that medical staff bylaws constitute contracts between the hospital and the various members of the medical staff. That is not to say this contractual issue will not be raised at some later point in time, since the lawsuit also asserts claims for unfair deceptive anticompetitive and illegal trade practices, claims based upon termination of physician’s privileges, claims for violations of the Federal Anti-Kickback Statute along the lines of economic credentialing, and finally claims based upon the hospital’s alleged breach of a corporate integrity agreement, the terms of which are not disclosed or discussed in the opinion.